Politics and policy
Public officials agree to review tendering rules
Posted Wednesday, July 25 2012 at 19:05
Top public officials have reached an agreement to change procurement rules and give accounting officers flexibility in managing tenders as the government seeks to speed up absorption of donor funds.
Under chairmanship of Prime Minister Raila Odinga, cabinet ministers and permanent secretaries met in Nairobi on Wednesday and resolved to shorten tendering and reduce donor influence in the process.
“We have to change aspects of our procurement rules, which have created bureaucracy in the tendering process instead of facilitating it,” Mr Odinga said.
The lengthy tendering rules introduced in 2005 to boost transparency and rid public procurement of corruption have of late been criticised for paralysing government operations and locking out small-sized businesses.
But the low absorption of donor funds has of late attracted keen interest of policy makers on the rules as the government seeks to boost its expenditure to stimulate economic activity and speed up growth.
Public officials believe 100 per cent absorption of Sh1.158 trillion 2012/13 Budget will raise the chances of the government meeting its 3.5 to 4.5 per cent growth projection for this year.
On Wednesday, Finance minister Njeru Githae said the country was finally back in the good books of donors but was not in a position to make good of it due to low uptake of external funds.
“Now that we’ll be meeting every two months to review trend in budget funds absorption, we have also resolved to redistribute funds that remain unutilised to departments that deserve them,” Mr Githae said
The government agencies have also cited stringent donor conditionalities among the reasons for slow uptake of external funds.
Data prepared by office of the Controller of Budget show that more than 90 per cent of budget raised from domestic sources is absorbed every year compared to just 44 per cent (target 75 per cent) for donor funds.
Even more worrying from the official figures, the government officers have consistently absorbed more than 89 per cent of money allocated for recurrent budgets since 2006.
In comparison, only 36 per cent of development budget has been absorbed over the period despite of the project’s ability to create jobs and fix the country’s external competitiveness.
Out of Sh430 billion that Kenya has received from various donors over the last three years, just 30 per cent of it has been disbursed so far.
“The problem with donors’ money is that even if tendering stalemate prevents it from being disbursed, we still have to pay commitment fee as specified in the contracts signed”, said treasury PS Joseph Kinyua.
He added: “Most of the time, commitment fee is a substantial amount of money that would have lifted a critical segment of the economy.”